As Ireland Flails, Europe Lurches Across the Rubicon

By

Charles Forelle,

David Gauthier-Villars,

Brian Blackstone And

David Enrich

December 27, 2010

DEAUVILLE, France—On Oct. 18, Angela Merkel and Nicolas Sarkozy took a sunset stroll on the beach of this chic casino resort. Five months earlier, Europe had committed more than $100 billion to rescue Greece. Now the Continent's debt crisis was moving on to Ireland, and the German leader worried Berlin would have to foot the bill for this and future bailouts.

"Angela, I'm going to help you," the French president said, before they set out for the boardwalk. The air chilled, so Mr. Sarkozy ordered an aide to fetch...